UK Insurance & Long-Term Savings Key Facts Insurance & Long-Term Savings Key Facts ... Insurance &...

KEY FACTS

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UK Insurance & Long-Term Savings

Key Facts

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ASSOCIATION OF BRITISH INSURERS

Contents 1. Top 10 key facts

2. Insurance & long-term savings: a UK success story

4. Insurance & long-term savings: Households and types of products

6. General Insurance Statistics

12. Insurance & long-term savings: How they work for you

18. General Insurance Fraud

19. Long-term Savings and Life Statistics

24. How Customers Purchase Insurance Products

26. Insurance & long-term savings: Important role as investors

27. Contacts

The UK insurance industry is the largest in Europe and the fourth largest in the world.

It plays an essential part in the UK’s economic strength, managing investments of over £1.6 trillion and paying nearly £12bn in taxes to the Government. It employs around 300,000 individuals, of which around a third are employed directly by providers with the remainder in auxiliary services such as broking.

On behalf of its members, the ABI works with government, regulators and policymakers to create and maintain effective insurance markets for consumers, and represents the UK insurance market in the media. We provide consumers with general information on insurance and savings products and services and promote best practice, transparency and high standards within the industry.

Each year the ABI publishes a summary booklet of the UK insurance industry. This booklet provides facts and figures from 2015 (unless otherwise stated and where available) about UK insurance1 and its significant contribution both to the economy and society.

1 Unless stated, data is ABI data and covers ABI data providers only.


KEY FACTS

1

The UK is the 4th largest insurance & long-term savings industry in the world and largest in the EU

1

UK insurers contribute £35bn to the UK economy

2

£35bnABI Members hold £1.6trn invested assets

3

£1.6trn

There are 305,500 people employed in the UK insurance industry

4 £44m was paid out each day in private motor & property claims

5

£44m

Travel insurers paid out £365m claims to travellers who needed help whilst they were abroad

6

£8.2bn was withdrawn from pensions in first year following reforms

7 Over 15 million employees contributed to a workplace pension in the UK in 2015

8

15m

97% of Protection claims presented were paid out

9

£1.3bn fraudulent claims detected

10

£1.3bn

305,500

Top 10 Key Facts

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Insurance & long-term savings: a UK success story

Total premiums 2015 (USD billions)

No Data

0 - 99,999

100,000 − 199,999

200,000 − 299,999

300,000 − 399,999

400,000 − 499,999

500,000+

Total premiums 2015 (USD billions)

22%The UK insurance and long-term savings industry generates over a fifth of total EU premium income.3

Breakdown of worldwide premium income by country, 2015

1stThe UK has the largest insurance industry in Europe and the fourth largest in the world.2

2 Source: Swiss Re, Sigma No 3/20163 Source: Insurance Europe


KEY FACTS

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Total Premium Income, $bn, 2015

305,5007

£35bn5

£11.8bn6

United States

Japan

PR China

United Kingdom

France

1,316

450

387

320

231

4354

4 Bank of England, Jan 2016 5 Blue Book 2015, Office for National Statistics6 PWC, Total Tax Contribution of the UK Insurance Industry, 2014 7 Office for National Statistics licensed under the Open Government Licence v.3.0.

9344

Long-term savings providers

Number of authorised life insurance companies in the UK, of which 195 are UK authorised and 240 are headquartered in another European country and passport in under the EU Third Life Directive.

General insurers

Number of authorised general insurance companies in the UK, of which 340 are UK authorised and 563 are headquartered in another European country and passport in under Solvency II.

contribution to the economy

In 2013 the UK insurance industry contributed £35bn to the UK economy.

taxes paid

In 2014 the sector contributed nearly £12bn in taxes to the UK government.

employees

In the UK, 111,600 are directly employed by insurance companies and 193,900 are employed in auxiliary services to insurance and pension funding; such as broking, & third party services.

Insurance & long-term savings: Households and types of products

Of the 26.7 million households in the UK in 2014:

20.4 million had contents insurance 20.1 million had motor insurance 17.3 million had buildings insurance 3.2 million had mortgage protection 1.9m million had private medical insurance.

And for long-term savings products:

5.4 million had whole of life assurance 2.4 million had a personal pension 0.6 million had term life assurance 0.3 million had income protection8

8 Source: ABI Analysis, Office for National Statistics, Department for Environment, Food and Rural Affairs. (2016). Living Costs and Food Survey, 2014


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KEY FACTS


Household holdings & expenditure on insurance and long-term savings products, 2014

5

3,200£

0

400

1,000

1,800

2,000

2,800

3,000

Personal pensions

Motor Income protection

Fixed Term life

Whole life

Buildings Contents

80%

0%

Average annual household expenditure (£)

% of households with product

70%

60%

50%

40%

30%

20%

10%

2,600

2,400

2,200

200

800

600

1,600

1,400

1,200

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£28.6m

£10,955

£33m MOTOR INSURANCE

99%

6

underwriting profit

The £33m underwriting profit in 2015 was the first time that the UK motor insurance market made a profit since 1994.

paid per day

Insurers paid out £28.6m per day in motor claims of which £21.2m was for domestic claims and £7.4m related to commercial claims.

average Bodily Injury claim

Whilst average claims for bodily injury are high, the overall average for all types of private car claims was £2,671.

claims acceptance

In private motor, around 99% of the total number of claims made were accepted in the 2014/15 period.

£440 average premium

By Q3 2016, the average premium for private motor had risen to £440, following the rise in Insurance Premium Tax (IPT) from 6% to 10%.

General Insurance Statistics

KEY FACTS


450

340

440

430

420

410

400

390

380

360

370

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

350

Average premium paid for private motor insurance* £

*the average amount paid for a fully comprehensive policy where the policy holder holds a full driving licence

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-£22m £15.0m PROPERTY INSURANCE

350

340

330

320

310

300

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

290

Average premium paid for domestic property insurance* £

8

£308

*the average amount paid for a combined buildings and contents policy

underwriting loss

The UK property insurance market made an underwriting loss for the first time since 2010.

paid per day

Insurers paid out £15.0m per day in property claims, of which £8.1m was for domestic claims and £6.9m related to commercial claims.

average premium

By Q3 2016 the average premium for a combined building and contents policy had fallen to £308, down 10% from its highest peak in Q3 2012. The average premiums for buildings and contents only, were £268 and £140 respectively.

KEY FACTS


*Percentages based on value of gross claims incurred

Domestic Property Insurance Claims, by type of Claim

Weather 20%

Escape of water 26%

Fire 16%

Theft 13%

Accidental damage 11%

Domestic Subsidence 4%

Other domestic claims 11%

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£1mTRAVEL INSURANCE

£1,906

10

HEALTH INSURANCE

1.5mpaid per day

In 2015, travel insurers paid out £365m for 494,000 claims to travellers who needed help whilst they were abroad. £197m of this was to cover the cost of emergency medical treatment, and £128m for cancellations.

per claimant

The average amount paid out to each claimant for private medical insurance came to £1,906.

people with Health Cash Plans

KEY FACTS


LIABILITY INSURANCE

PET INSURANCE

£117munderwriting profit

The liability insurance market made an underwriting profit of £117m in 2015.

£7.2mpaid per day

Every day, liability insurers paid out claims of £7.2m, of which £2.3m was for employers’ liability.

3.4mcustomers

Around 94% of insurance being for cats and dogs.

£1.8mpaid per day

£721average claim

TRADE CREDIT

11,900policies

£400k

Business can take out trade credit insurance to protect themselves against financial distress of a trading partner.

paid per day in claims

KEY FACTS


Insurance & long-term savings: How they work for you

12

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HomePeter makes sure the house and contents are protected by taking out property insurance at an average cost of £308 a year.

Property insurers pay out an average of

£8.1m per day to repair homes and

replace contents.

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MotorSusie renews her car insurance at an average cost of £440 a year.

The average bodily injury claim following a motor

accident costs £10,955.

PetThe Johnsons make sure their pet dog Barney is looked after in case he needs medical treatment.

Pet insurers pay out£1.8m per day

for veterinary treatment for pets.

14

KEY FACTS


Retirement Grandma June saved for her retirement throughout her working life. Earlier this year, she took some of her pension as cash and bought an annuity with the rest to ensure she has an income throughout her retirement.

There are 19.1m individual pension policies in force.

TravelThe Johnsons went on holiday to Spain recently and took out travel insurance to protect them whilst they were away.

Travel insurers pay out more than £500k a day to help people who need medical treatment abroad.

15

KEY FACTS


Liability Peter owns a café in the town and makes sure he is covered with liability insurance should anything go wrong.

ProtectionSusie hurt her back a few months ago, but her employer has income protection insurance and paid her a salary when she could not work.

Insurers pay out £9.9m every day

for protection policies, including income protection, critical illness and life insurance.

Liability insurers pay out £7.2m every day to protect businesses.

16

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18

General Insurance Fraud

£1.3bn

£800m

£390m

Detected Fraud - Value of Cases, £bn

1.6

0

0.2

0.4

0.6

0.8

1.0

1.2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

£bn

1.4

detected fraud

Over 130,000 detected cases of attempted claims fraud in 2015 - a 6% increase in volume compared to 2014.

motor fraud

Fraudulent motor claims were the most common, over 70,000 in 2015, and valued at £800m.

liability fraud

Volume of fraudulent liability claims is up 36% in 2015, with 26,900 detected, and valued at over £390m.

KEY FACTS


PENSIONS

15.1m919.1m

PENSION AUTO-ENROLMENT

Between 2012 and 2018 certain employees who are not already in a work place pension scheme will be automatically enrolled into one.

4.6m 9.7m

9 ONS - Annual Survey of Hours and Earnings (ASHE)10 Pensions Regulator, August 2016 *Includes personal and work-based individual pension as well as trust based pensions

19

policies

More than a third of individual pension policies were work place pensions.

contributingemployees

This has increased by 9% on 2014.

auto-enrolled

By the end of August 2016, 9.7m10 employees had been automatically enrolled in a work place pension.

policies sold

Long-term Savings and Life Statistics

abi.org.uk


20

RETIREMENT INCOME

£8.2bn

Pension reforms announced in the 2014 Budget allowed people to take their pension pots in cash rather than having to buy an annuity.

withdrawn

In the first year since pension reforms introduced in April 2015, £8.2bn was withdrawn from pension pots; £4.3bn in lump sums & £3.9bn worth of payments from income drawdown.

KEY FACTS


INCOME DRAWDOWN

£6.1bn

Income drawdown contracts allow you to take an income from your pension pot while the rest remains invested.

ANNUITIES

6.2m

An annuity can be purchased with a sum of money from a pension which will then provide an income during retirement.

58.5%82,000

invested in drawdown

In the first year since the reforms came in, £6.1bn was invested in Income Drawdown products. This compares to £3.2bn sold over the same period prior to the reforms, an 89% rise.

pension annuities

In 2015, £14bn in payments were made.

annuity sales

Annuity sales have fallen by more than half from 189,000, with a total value of £7bn in the year 2014, to 82,000, with a total value of £4.2bn in the year 2015.

bought from existing provider

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22

INVESTMENT AND SAVINGS

£36.7m 112,0005.8m

Investment and savings products include investment bonds and endowments.

LONG-TERM CARE

21,000

policies in force paid per day new policies in 2015

policies in force

KEY FACTS


PROTECTION

2.1m £9.9m26.9m

Protection products include term life, whole of life, relevant life, income protection, critical illness and collective life insurance and provide financial security in the event of serious illness, accident or death.

10.8m 97%

11 Excludes Group Income Protection

23

policies in force

There were 26.9m individual term, whole of life, income protection and critical illness insurance policies in force. In addition, there were 646,000 collective life policies.

new policies

Around 2.1m new individual and group protection products were taken out in 2015.

paid per day

£3.6 billion was paid to 129,000 customers or families as a result of claims on protection insurance policies, an average of £9.9m each day.

members

There were 10.8m members of group life cover, group income protection and group critical illness schemes, of which 8.1m were life cover. Group cover is provided by employers for the benefit of their employees.

claims acceptance

97% of protection claims were paid out11, including 98% of term life insurance claims and 93% of critical illness claims.

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The relative simplicity of some household insurance products means that consumers are more likely to purchase them directly than they are longer-term insurance products. Over half of personal motor insurance (56%) and a quarter of personal property insurance (27%) is purchased directly by consumers, which includes sales via a price comparison website.

Long-term savings and investment products tend to be taken out with advice. Three-quarters (75%) of customers who purchased a pension, protection or other long-term insurance product had some form of advice. Whether advice is taken depends on the product being purchased.

Independent advice was taken by 63% of consumers in selecting a pension product. For protection products it was 71%.

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How Customers Purchase Insurance Products

KEY FACTS


Distribution of long-term products, by advice channel

Independent 64%

Restricted 11%

Non-advised 25%

Distribution of personal lines, general insurance

Independent Intermediaries 35%

Company Agents 3%

Banks/Building Societies 10%

Direct 41%

Utilities / Retailers / Affinity Groups 10%

Other 2%

25

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Insurance & long-term savings: Important role as investorsInsurers that provide long-term savings and life insurance products ensure they meet their long-term liabilities by investing the premiums received in different types of investments.

At the end of 2015, ABI members held £1.57trn of assets, of which £1.44trn was held by life insurance companies.

UK Equity holdings have decreased by 16 percentage points since 2005, whilst Overseas Equity holdings have risen by 6 percentage points. Over the same period, Unit Trust holdings have increased by 11 percentage points.

Chart of invested assets by asset class

26

100%

50%

40%

30%

20%

10%

0%

60%

70%

80%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

90%

Public Sector Debt SecuritiesPrivate Sector Debt SecuritiesUK EquityOverseas Equity

PropertyUnit TrustsOther

KEY FACTS


Contacts

ABI Statistics Helpdesk [email protected] 7216 7390

Assistant Director, Head of Strategy, Data and Analytics Matt Cullen [email protected] 7216 7513

ABI Member Relations [email protected] 216 3333

abi.org.uk


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About the ABI The Association of British Insurers is the leading trade association for insurers and providers of long-term savings. Our 250 members include most household names and specialist providers who contribute £12bn in taxes and manage investments of £1.6trillion.

www.abi.org.uk – has all the latest news, views and key information about insurance and the ABI’s work on behalf of the industry.

The ABI produces detailed statistics on the industry, which are free to members and can be purchased by others for a fee.

KEY FACTS

Follow us on Twitter @BritishInsurersDesigned by iloveclive.co.uk

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For more [email protected] 7600 3333

November 2016

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